Looking forward, IHS Markit forecasts that the world market for physical security equipment will grow at a compound annual growth rate (CAGR) of 7 percent from 2016 to 2021. By 2021, the physical security equipment market is expected to total US$41.7 billion annually.

Geographically, there are significant differences in terms of where future growth is expected to come from. China, the largest single market for physical security equipment in terms of revenue, accounted for 29 percent of the global market in 2016. IHS Markit expects that by 2021 China will account for 38 percent of the global market, and will be larger than the North American and Western European markets combined. The majority of this growth is being driven by significant investment in video surveillance equipment. In 2016, China accounted for 42 percent of the global video surveillance market. However, significant investment by the Chinese government in safe cities projects, particularly focusing on traffic monitoring and city surveillance, will drive further growth in this market.

Vertical analysis of the global physical security market highlights several regional differences. As a result of the significant investment by the Chinese government, the Asian government vertical was estimated to be slightly less than twice the size of the Americas government vertical in 2016 — and nearly three times the size of the EMEA (Europe, Middle East, Africa) government vertical.

The Americas region, where the United States accounts for 79 percent of all physical security equipment revenue, is by far the largest residential market in the world. The US leads the world in many aspects important to the residential market such as video penetration and smart home adoption. Key trends driving this market include resolution quality improvements, advanced video content analytics and the growing adoption of cloud storage. A variety of new analytics continue to be developed and applied to video surveillance, the majority of which focus on refining what should and should not be recorded in order to save bandwidth and storage space.

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